Feeling unsure about what you’ll owe on closing day? You’re not alone. Closing costs can be confusing, especially with Maryland and Montgomery County rules. This guide walks you through what closing costs include, how much to budget, what’s unique locally, and smart ways to save. You’ll also see how to read your disclosures and what to ask before you wire funds. Let’s dive in.
What closing costs include
Closing costs are the one-time fees and prepaid items you pay to complete your home purchase and set up your mortgage. They are separate from your down payment. You’ll see lender fees, title and settlement charges, government taxes and recording fees, inspections, prepaid insurance, and escrow deposits.
As a planning rule of thumb, many buyers spend about 2 to 5 percent of the purchase price on closing costs. For example, on a $600,000 home, that is roughly $12,000 to $30,000. Your total depends on loan type, rate choices, property taxes, and which fees you negotiate.
Common buyer costs in Montgomery County
Loan fees
- Origination or processing fee. Charged by your lender to create the loan. This can be negotiable and sometimes offset with lender credits.
- Underwriting fee. Covers the lender’s review and approval of your application.
- Discount points. Optional prepaid interest that lowers your rate. One point typically equals 1 percent of the loan amount.
- Credit report and application costs. Third-party checks your lender needs to process the file.
- Appraisal fee. Pays for a licensed appraiser to value the property. Often paid up front and shown on your closing statement.
- Rate lock fee. Applies only if your lender charges for locking a rate beyond a standard window.
Title and settlement costs
- Title search and title insurance. Confirms clear ownership and protects against covered title defects. A lender’s policy is required with a mortgage; an owner’s policy is optional but common.
- Settlement or closing fee. Paid to the title company or attorney for preparing documents and conducting the settlement.
- Recording fees. County fees to record your deed and mortgage with land records.
- Notary fees. Typically small.
Government taxes and recording
- Recordation and transfer taxes. Maryland and Montgomery County charge taxes when deeds and mortgages are recorded. Who pays which tax depends on local custom and what your contract states. Ask your title company for the current breakdown and exact amounts.
- Mortgage recording charges. Fees due when the mortgage is recorded.
For current local practices and fee schedules, check the Montgomery County Department of Finance and ask your settlement agent for an itemized quote.
Prepaids and escrow deposits
- Prepaid homeowner’s insurance. Often the first year or partial year due at closing, depending on your loan.
- Initial escrow deposits. Lenders collect reserves for future tax and insurance bills.
- Prepaid interest. Covers interest from your closing date to the first payment due date.
- Property tax proration. Buyer and seller split the current tax period based on days of ownership.
Inspections, HOA, and extras
- Home, termite, well, or septic inspections if applicable.
- HOA or condo transfer and application fees, plus any estoppel or move-in fees. These can be several hundred dollars unless negotiated.
- Survey, flood certification, courier, and small admin charges.
Maryland and Montgomery County specifics
Transfer and recordation taxes
Maryland transactions include state and county recordation and transfer taxes. Montgomery County adds county-level charges that can be a significant part of your total. Who pays what can be negotiated in your contract. It is common for buyers to pay recordation charges tied to the mortgage and for sellers to pay certain transfer taxes, but the contract controls.
- Review state rules at the Maryland Department of Assessments and Taxation.
- Confirm current county practices and fees with the Montgomery County Department of Finance and your title company.
Property tax proration
At closing, property taxes are prorated so each party pays their share for the period they own the home. If assessments change or bills are delayed, the title company will handle adjustments on your settlement statement.
Condos and HOAs
Montgomery County has many condo and planned communities. Expect HOA or condo transfer and document fees. Verify amounts early with the seller and association, and negotiate responsibility in your contract.
Assistance programs
Maryland and Montgomery County offer programs that can help with down payment and closing costs for eligible buyers. Explore the Maryland Mortgage Program for statewide options and check the Montgomery County housing department for local programs and requirements.
- Learn more at the Maryland Mortgage Program.
- Visit Montgomery County’s Department of Housing and Community Affairs for local resources.
Timing and what to expect
Your disclosures and the 3-day rule
Under federal rules, your lender must provide a Closing Disclosure at least three business days before closing. It lists your final loan terms and every fee. Review it carefully and compare it to your Loan Estimate. Ask your lender and title company to explain any change.
- See what a Closing Disclosure includes from the CFPB.
- Learn what a Loan Estimate shows from the CFPB.
Walk-through, funds, and settlement
You’ll typically do a final walk-through the day of or just before closing to confirm the property’s condition. Your lender and title company will tell you the exact cash to bring. Follow their wire or certified check instructions and always call your title company to confirm wiring details to avoid fraud. Settlement may be in person or electronic depending on your provider and Maryland rules.
Ways to lower or manage costs
- Compare lenders. Request Loan Estimates from at least two lenders within a short window and compare rates, points, and fees line by line.
- Negotiate seller help. Ask for a seller credit toward closing costs, subject to program limits and market conditions.
- Consider lender credits. You can choose a slightly higher interest rate in exchange for credits that reduce cash due at closing.
- Use assistance programs. The Maryland Mortgage Program and county offerings may provide grants or zero-interest loans for eligible buyers.
- Shop title services. Ask what the settlement fee includes and compare quotes from reputable local title companies.
- Discuss financing options. Some fees may be financed into the loan based on your product and loan-to-value limits.
For a step-by-step guide to shopping and comparing mortgage costs, review the CFPB’s home loan toolkit.
Quick checklist before closing
- What is my total cash to close based on my most recent Closing Disclosure?
- Which transfer and recordation taxes am I responsible for under my contract?
- How much will my lender collect in escrow for property taxes and insurance?
Example cost snapshot
Here is an illustrative example. If you buy a $600,000 home, a 2 to 5 percent closing cost range is about $12,000 to $30,000. That total can include lender fees, title and settlement charges, recordation and transfer taxes, inspections, prepaid insurance, escrow deposits, and prepaid interest. Your exact amount depends on your loan program, negotiated credits, and the current county and state fee schedules.
Ready to run the numbers?
If you want a clear, line-by-line estimate for a Montgomery County purchase, reach out for a local breakdown and next steps. I will help you compare lender quotes, review your Closing Disclosure, and line up the right title partner so there are no surprises on closing day. Let’s Connect with Myah Moxley to get started.
FAQs
Are closing costs separate from the down payment?
- Yes, closing costs are fees and prepaid items due at settlement, while your down payment becomes your equity in the home.
Who pays transfer and recordation taxes in Montgomery County?
- It depends on local custom and the contract, so confirm with your agent and title company which party pays each tax before you sign.
Can I roll closing costs into my mortgage?
- Sometimes, depending on your loan program, lender rules, and loan-to-value limits, so ask your lender for options.
Are any closing costs tax deductible?
- Certain items like mortgage interest, property taxes, and some points may be deductible, so consult a tax professional for advice.
How much cash should I bring to closing in Montgomery County?
- Use your latest Closing Disclosure for the exact figure and bring certified funds or follow the title company’s wiring instructions after confirming them by phone.
When will I see my final costs?
- Your lender must give you a Closing Disclosure at least three business days before closing, which lists your final loan terms and all fees.
